Q+A: Rodney Jones interviewed by Corin Dann

Kiwi in Beijing says New Zealand
needs a rethink on doing business with China

Beijing-based economist Rodney Jones told Corin Dann on
TVNZ’s Q+A programme that China was changing and New
Zealand’s approach with the global super power was no
longer the right one.

Mr Jones is a Principal of Wigram
Capital Advisors, an Asian-based macro advisory firm that
provides economic analysis and advice to leading global
investment funds on developments in Asia.

China recently
changed legislation to allow Premier Xi Jinping to remain
president indefinitely, and Mr Jones said this would make
dealing with Beijing tougher for other countries.

“The
issue is how we respond, and we’re not doing a very good
job of responding, because we’ve been looking through the
rear view mirror. We’ve been looking at our successes, and
we did remarkably well for 30 years. But we’ve got to
think about a different China going forward, and that means
we have to reorganise the way we do things.”

Q
+ AEpisode
3RODNEY
JONESInterviewed by CORIN
DANN

CORIN Welcome back, and
good morning to Rodney Jones, principal of Wigram Capital
Advisors in Beijing. Great to have you back on the show,
Rodney.RODNEY Thank
you. Good to be
back.CORIN Give
us a sense for what’s going on. The ground in China at the
moment — we’ve got this two-term limit scrapped. Xi’s
getting his grip on things. Should we be
worried?RODNEY We
have to understand what’s going on. So we’ve got the
National People’s Congress this week. It ends tomorrow.
They’ve changed the constitution. Normally, these are
pretty quiet events. This one’s been tumultuous. We’ve
got the end of the two-term limit. This means President Xi
can be there for life. I saw one article today suggesting he
may retire in 2032 or 2037. So complete change. We’ve got
a new vice president, Wang Qishan, who is over the previous
retirement age. So the old norms have been thrown
overboard.CORIN All right, so let’s
assume Xi’s strengthened his grip. He’s got more power.
He was pushing through corruption — anti-corruption
measures, and he was supposed to reform the economy. Is he
doing either of those
things?RODNEY Well,
there’s some good stuff happening. The Family Planning
Commission has gone. No one’s commented on that, but the
Family Planning Commission, that was a really brutal
organisation for the ordinary person, has gone. The NDRC,
which is the State Planning Commission, the old State
Planning Commission is
de-powered.CORIN So
he’s
modernising.RODNEY So
he’s modernising, and his vice premier, Liu He, is a very
capable
technocrat.CORIN But
what does it mean for—? Okay, so New Zealand’s looking
at upgrading its free-trade deal with China. We’ve still
got $26 billion in two-way trade. Is he likely to get
pushier with
us?RODNEY That’s
what we have to find out. We don’t know how foreign policy
will be. At the moment, they’re very orientated on the US.
We’ve got the Trump tariffs — may be announced as soon
as this week. We don’t know what that will look like. But
he’s clearly being assertive. We’ve been talking over
the last few years on the show. Over the last five years,
this is the direction we’ve been
heading.CORIN The
Trump tariffs — so, this is the talk of $60 billion in
tariffs that might get targeted at China. That would be a
massive escalation, wouldn’t
it?RODNEY Yeah,
absolutely.CORIN Trade
war?RODNEY It
depends how China responds. But to be fair to the US, the US
is very open. They’ve sponsored the global trading system.
Their tariffs are low. China’s tariffs are high. We want
China to open up, but they’re not, under Xi. But a trade
war is not the way to get
there.CORIN Just
before we move on to New Zealand — would that affect —
that tariff issue, the trade-war issue — will that affect,
do you think, our free-trade agreement negotiations in the
upgrade?RODNEY Well,
I think it’s hard work anyway. We’re trying to make
water run— CORIN It seems to have
gone off the
boil.RODNEY
It’s gone off the boil. We’re making water run uphill.
That’s not where China is. Under Xi, it’s personal,
authoritarian. It’s his personal leadership. China’s
looking in. It’s going to be harder work for countries
dealing with
China.CORIN Upshot
is it’s tougher for New Zealand going forward from there,
isn’t
it?RODNEY
It’s absolutely
tougher.CORIN Well,
let’s talk about China’s influence here, because
yourself and some others, Anne-Marie Brady, have raised some
concerns about China’s sort of influence in New Zealand.
Are you worried about
that?RODNEY Yes,
because I think China is what it is. And while it’s a
surprise that Xi has gone for lifetime rule and personal
rule, that was the direction we’re heading. So China is
what it is. It’s a global power. It’s asserting itself.
It’s rising. This is what we have to live with. This is
our future. The issue is how we respond, and we’re not
doing a very good job of responding, because we’ve been
looking through the rear-view mirror, we’ve been looking
at our successes, and we did remarkably well for 30 years.
But we’ve got to think about a different China going
forward, and that means we have to reorganise the way we do
things.CORIN Do we
stand up to
them?RODNEY
No, it’s not about that; it’s about what we do at home.
So, for instance, take out New Zealand-Chinese community.
They’re five percent of the population. They’re
under-represented in parliament. China’s going to be
competing with us at home and in the Pacific. We have to
rise to that competition. And that’s part of promoting New
Zealand-Chinese into parliament, having more MPs, and our
political parties have managed that in a way to focus on
China. It’s been about China. It’s been about having MPs
who can raise money and open doors in Beijing, and that’s
not going to fly. We have to strengthen ourselves to deal
with a highly competitive
China.CORIN But is
that Chinese population in New Zealand — are they nervous
about China watching
them?RODNEY Yeah,
it’s difficult because things are monitored, and you’re
not sure— it’s not a free society, and that impacts
here. But there’s voices in the community here. We’ve
got so many strands of the Chinese community here, from
families that have been here 150 years from Vietnam and
Malaysia and recent arrivals from
China.CORIN So
how does New Zealand navigate that without coming across as
anti-Chinese, as
xenophobic?RODNEY That’s
why we have to promote our Chinese
community.CORIN
Get them more
involved.RODNEY Get
them more involved and have independent voices. The
political parties have to deal with this. You don’t need
to raise money because that money will tend to come from
CCP-related organisations, and you don’t have to open
doors in
Beijing.CORIN And
do you think our political parties have failed so far in
that
regard?RODNEY The
political parties are our biggest problem right now. Look at
the presidents going off to Beijing — both presidents,
from Labour and National — and singing the praises of Xi
Jinping. That’s completely inappropriate. This was a few
months back. That’s what we need to change. We need to
recognise China for what it is, understand it and change
ourselves.CORIN Does
that mean following Australia, which has taken a more
aggressive line? It’s looked at crackdowns on political
funding. Or is that too
far?RODNEY Yeah,
I think we need electoral law reform. We do need electoral
law reform and funding. We need to be more transparent. In
Australia, the debate would be in a tone that would make New
Zealanders uncomfortable. It’s we don’t want to follow
the US and Australia on this debate, but we want to do it
our way, and that’s more inclusive, but dealing with the
issues.CORIN What
do you make of Winston Peters as Foreign Minister? Has that
changed things? His rhetoric — I mean, frankly, it is
difficult to understand at times. But his rhetoric seems to
be, even if it’s targeted at a New Zealand First audience,
perhaps, a bit more
anti-China.RODNEY I
wouldn’t say it’s anti-China. It’s about just creating
a little bit of distance. We don’t know the direction
China’s going to go. We don’t need to be friends with
China; we have to be
partners.CORIN So
when he signalled that he wasn’t so keen on the Belt and
Road Forum, which was one of the first— a significant
thing that we signed up to, which China would have liked.
How would they react to
that?RODNEY Well,
they’re not going to like that, but there’s things
we’re going to have to do that they don’t like. We’re
going to have to have a more robust relationship going
forward. Belt and Road — it’s very hard to see how it
makes sense from a New Zealand perspective. It makes sense
in Central Asia and South Asia. That’s the focus of the
strategy. In the Pacific, we’ve got competitive issues
there.CORIN
We’re Western nation signing up to their thing, though,
isn’t it? That’s the deal, isn’t
it?RODNEY Yeah,
well, that used to be the deal. That used to be the deal. It
has to change going
forward.CORIN On
that note, this week, Fonterra will give its interim
results, and they’re going to have to deal with the
Beingmate issue, which is the infant formula company that
own about 20%. The share prices have fallen. They’re
looking at a big write-down — hundreds of millions of
dollars, potentially. You’re in China. How big a problem
is
that?RODNEY That’s
a huge problem. We talked about it on the show. At the time,
I said it was reckless. This is what we’re doing wrong. We
do these big trips to China. It’s fantastic, it’s
ra-ra-ra — the boards, the company, the prime minister. It
looks easy; it’s very straightforward, and it’s not at
all. And, living there, that deal made no sense at all at
the time.CORIN But
it’s skin in the game. They had to get some skin in the
game, didn’t they? Because they’re making $3 billion in
exports of raw milk
powder.RODNEY Yeah,
but you can’t rush in and do a joint deal like that where
you have no control, no management. It never made sense. It
never, from day one, made sense. And it was a bricks and
mortar when things were going online. So it was an old
economy-type investment, where they had no control, no
unknown character. That’s exactly the sort of thing
we’re doing wrong. We’re rushing and
impulsive.CORIN So
what do we do in future, then? So for a future company
that’s looking to get into
China.RODNEY It’s
hard work. I mean, we have an office in China. Operating in
China is hard work, and it’s always going to be hard work.
And we just have to be realistic, whereas we’ve had a bit
too much kind of hype and
ra-ra-ra.CORIN $26
billion in two-way trade,
though.RODNEY It’s
been fantastic, but it’s slowing, but it’s slowing. You
look at our ranking — I mean, we were number one for a
long time in terms of exports to China. We’re now, in the
last three to four years, number nine. So we’re slipping
down the rankings. So, as you say, you look through the
rear-view mirror — we did an amazing job. We’re going to
be dealing with a different China going
forward.CORIN Fascinating
stuff. Rodney Jones, thank you very much, as always. We
appreciate
it.

END

Q+A, 9-10am Sundays on TVNZ 1 and one hour
later on TVNZ 1 + 1.Repeated Sunday evening at around
11:35pm. Streamed live at www.tvnz.co.nzThanks to the
support from NZ On Air.Q+A is also on Facebook+ Twitter + YouTube

In response to the challenges facing Scoop and the media industry we’ve instituted an Ethical Paywall to keep the news freely available to the public.
People who use Scoop for work need to be licensed through a ScoopPro subscription under this model, they also get access to exclusive news tools.

A State Services Commission investigation into the use of external security consultants by government agencies has uncovered failings across the public service, including breaches of the code of conduct...

However, the inquiry found no evidence of widespread inappropriate surveillance by external security consultants on behalf of government agencies. More>>

...It represents a cross-party commitment to a fundamental shift of policy for our most disadvantaged children and should help undo 30 years of damage to children from our most vulnerable families. More>>

The referendum on cannabis for personal use is part of Labour's confidence and supply agreement with the Greens. It could be one of potentially three referenda - decisions have yet to be made about euthanasia and changes to electoral laws. More>>

Prime Minister Jacinda Ardern's final post-cabinet press conference of the year focussed on announcing the appointment of Helen Winkelmann as the next Chief Justice, and an update on effort to eradicate Mycoplasma bovis from New Zealand. More>>

In the 22 years since the Act came into force, it has become clear that the modern-day fingerprint analogy is increasingly inapt... Theoretically, whole genome sequencing could ultimately become the standard method of analysing a DNA sample. Such a development will give a new perspective on the concept of genetic surveillance in the criminal context. More>>